There are mixed opinions on whether America is in a recession, and if we will be entering a depression very shortly. The value of the dollar is going down, and the economy isn't doing well. So let's say I somehow acquired $50K. Should I just leave it in my banking account, or should I be smart and convert them into Euro's?
I would say Euros will be up, the Central banks in Europe won't be lowering their interest rates anytime too soon. They forsake this tool more or less for controlling the economy when they form the EU. Too many different countries with different economical conditions. But USA is dropping interest rates. I would say Euros will continue to strengthen against the US dollars.
Just as a disclaimer- The following is not considered "investment advice", and is merely my opinion. Talk to your financial advisory before making any investment decisions. I am not liable . Now: The problem you're going to incur is that the price of USD:EUR advertised in the newspaper ~(1.53) is only availible to huge financial institutions who convert more than 1,000,000 dollars at a time. To convert that amount of money you're probably going to pay a 1.60+ price for each euro, meaning the euro has to go up a LOT for you to at least break even. What I would personally advise is you place that money (if you really want to invest in euros) into the stock market on an index which invests in the dollar, so you basically own stock and gain all the benefits of a stronger (or weaker euro if you're 'bearish') without paying massive conversion fees. Stocks: UDN (If you feel the dollar is going to be weaker) UUP (If you feel the dollar is going to be stronger) These are ETFS: http://finance.google.com/finance?q=AMEX:UDN http://finance.google.com/finance?q=AMEX:UUP
That would be a viable option, but just one issue, currently the USD dip seemed to predate a recession. If there is one, the US economy will affect Europe too, though the dollar exchange may be favorable to the Euros, the index may fall along negating any effects of a stronger Euros.
Well then the Brazilian Real is the only currency that Warren Buffet is invested in right now, and is the strongest YTD. If you're trying to flea from the dollar, you can go anywhere basically. What I meant with that post is you lose a lot of money doing direct currency conversions, you're better off putting the money into a stock that is weighted to the strength or weakness of the dollar, or another currency (If you bet on the weakness of the dollar with the UDN, and the dollar goes down, you make money, not lose it). Direct conversion costs you a LOT of money.
You are getting screwed. What are you doing, changing $10s and $20s in the Charles De Gaulle arrivals hall? When I wire-transfer money to myself from an American to a European account, it gets exchanged at less than 1% over the published rate (e.g., if it's 1.53 in the paper, I'm getting 1.542). And that's for small amounts; $5K etc. No millions here. As to the original question, I believe the trick is to find a way out of dollars that lets you go back in time to before the dollar sucked quite so suckfully. That means identifying a managed currency that has ridden down with the dollar to a point that is becoming untenable due to oil prices. I am thinking Yuan or Hong Kong dollars may be the golden path. Move your dollars to one of these and wait until their central bank gives up on the dollar. Only problem is the low interest rates in the meantime.
Yuan is non convertible so that can be a problem. Hong Kong dollars is linked to the USA dollars so most likely will float with it unless China decided to do some major changes. HK policy is that they can only issue a Hong Kong dollar if it has the equivalent exchange in U.S. dollars on deposit. Therefore any fluctuations in US dollars will directly impact the Hong Kong dollars.
The Yuan is great and has a lot on the upside. But I don't believe that you could invest directly. Whar do you think about rupees?
Great minds think alike We post at the same time and have the same opinion on Yuan. Cheers! Add on : India Rupee should be up along with the Yuan and is convertible, I think it would be a good choice.
Too funny The rupee is good and the exchange rate is still favorable. Even if the dollar increases you can always use it to outsource instead of excahnging it back
India economy as in China is growing rapidly, too rapidly for comfort. So a slow down may actually be good if it is a moderate slow down. With a fast growing economy and increasing middle class, their purchasing power growth is exponential. Considering that India had a Billion people, though it is still poor compared to the USA, the growth of their domestic market consumption should offset partially the impact of a USA recession. Therefore I don't think you will need to use it for outsourcing
There are various yuan-linked instruments, though. Right, but I don't think that can last. The drop in the dollar is causing inflation in Hong Kong, and they're not going to stand for that indefinitely. Once the bankers lose faith in the dollar's ability to claw its way back, they'll have to adjust or abandon the peg. Rupee I haven't really thought of. After working in India, HK, and China, I guess my gut feeling is that India is too unpredictable. No scientific basis, just intuition. I should have gone into Singapore dollars; there was a nice long window when it dropped with the US$ but now I think it's getting a bit late. Easy to convert, excellent banking system, stable economy. Oh well.
Converting your dollars to euros would be a total disadvantage for you, if you don't need to spend that money just wait for the dollar to go up, it can't and won't go any lower. It even went up a little bit and it's just a matter of time for it to go up again. Have a little patience and you will make more profit than converting your money now.
It will fall further, next week when the Fed cuts the interest rates further, you will see a steeper drop.
In light of the US economic crisis and the impending collapse of the US dollar, would I be wise to invest in Euros by wiring money to a bank in Europe that is on the Euro?